The company has been making big moves to turn its business around, including appointing a new chief executive, Art Peck, and removing the creative director of Gap brand, Rebekka Bay. So far, shoppers have not flocked back to the chain whose clothes were the epitome of casual-cool in the late 1990s and early 2000s.
Shuttering nearly 26 percent of its North American stores is Gap’s latest gambit to improve its bottom line. After the closures, which will largely take place this year, Gap’s North American fleet will consist of about 500 regular-price stores and 300 outlet stores. All of the stores that are being shuttered are regular-price Gap outposts.
Gap is not disclosing how many store jobs will be eliminated due to the closures. As part of its streamlining efforts, though, the company said it was cutting 250 positions from its headquarters workforce.
In a statement, Gap said that the decision to reduce its store portfolio reflects the move to online shopping.
“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” Peck said.
Indeed, experts say that many large American retailers are “overstored,” meaning they have more locations than they need for an era in which regional malls are dying and when customers are increasingly firing up their tablets and smartphones to shop. Other retailers, including Abercrombie & Fitch, Macy’s and Sears have also said this year that they will be trimming their brick-and-mortar footprint.
As Gap reduces its fleet of stores, it will also be working to make the brand more competitive by trying to get the fashion on-point again and working to speed up its supply chain. This effort is being led by Jeff Kirwan, an executive Peck installed as global president of Gap brand.
Gap estimates the store closures will result in a $300 million annualized sales loss. It also expects to incur one-time costs associated with the closures that total between $140 and $160 million.
Gap is one of few retailers to report sales results on a monthly basis. In May, the company reported that Gap brand saw a 6 percent decline in sales at stores open more than a year; in April, it saw a 15 percent sales decline.
Things haven’t looked much better at Gap’s Banana Republic chain, which has seen lackluster sales of its office-appropriate clothes. It has brought in designer Marissa Webb to try reinvigorate that brand’s sales. Old Navy, meanwhile, has continued to be a bright spot for the company, delivering strong sales growth.
In January, Gap announced it would close its Piperlime e-commerce site. Piperlime was the smallest brand in the Gap empire, and executives said that shuttering it would allow them to focus resources on the more pressing problem of fixing its larger brands.
Gap’s stock was down slightly in after hours trading.
Correction: An earlier version of this post misspelled the name of Rebekka Bay. Also, an earlier version incorrectly stated that the 250 eliminated positions would come from Gap’s San Francisco headquarters office. The 250 positions will come from Gap corporate offices across the country.